Trade The Journey

Trade The Journey

Trade Review: Week of November 20

Trade Review: Week of November 19

Trade Asset: SPY (S&P 500 ETF)

Trade Leg 1: Buy $449 Call

Trade Leg 2: Sell $455 Call

Week of Expiration: 11/24

Premium: $2.50

Profit/Loss for the Week: $0.36

Hypothesis: SPY gapped up on positive CPI report indicating a possible end to rate hike.

Hypothesis Explanation:

I missed capitalizing on the gap up resulting from the favorable CPI report. Regrettably, a scheduling error led to a delayed response, prompting self-reflection on maintaining vigilance. Typically, the fear of missing out triggers impulsive trading actions, but this time, I exercised patience. Learning from past endeavors, I recognized the peril of trying to time the market and embraced the wisdom that markets can defy reason longer than one’s financial endurance. This realization follows some costly experiences, solidifying the significance of this trading adage.

Entry Strategy and Patience:

Contrary to previous practices, I refrained from attempting to predict a market top and entering a short position. Instead, I focused on securing a favorable price by placing a limit order slightly below the premium price. Although I entered the trade at the desired price, I acknowledge that further patience might have yielded an even better entry. Waiting for a day and a half before entering the trade signifies progress in exercising restraint, yet there’s room for improvement in optimizing entry points.

Trade Management Insights:

The trade commenced with a modest profit, but the S&P 500 experienced fluctuations throughout the week, transitioning from a favorable position to a substantial loss within a day. Deciding when to close a position based solely on premium considerations posed challenges, prompting a shift to chart analysis for more informed decisions. Recognizing the need for adjustments, I now base decisions on reference levels rather than relying solely on price, leading to smoother trading despite encountering some losses.

Critical Price Level and Market Observation:

Monitoring the SPX, the pivotal price level was identified at $451.22, with a potential breakthrough signaling positive momentum. Rather than relying solely on market open and close, I closely observed price movements around this level. Despite initial attempts, the SPX broke above $451.22 before the week’s close, providing an optimistic outlook.

Trade Review and Future Outlook:

A comprehensive review of the trade is deferred until after the position is closed. Optimism prevails for the upcoming week, anticipating a potential catalyst in the form of the Fed minutes release on Tuesday. Considering the shortened week and potential liquidity decline due to the Thanksgiving holiday, the plan is to exit the position in the first half of the week.

Trading Journal:

Leave a Comment

Your email address will not be published. Required fields are marked *